‘Overpayment’ Clawbacks Hanging Over Home Health Providers’ Heads

With the passage of the most recent home health final rule, providers are reminded that clawbacks are still hanging over their heads.

Broadly, temporary cuts, or clawbacks, are an attempt from the U.S. Centers for Medicare & Medicaid Services (CMS) to recover perceived overpayments from home health providers in relation to the shift to PDGM.

“It’s a terrible thing to have in front of us, because it’s already been difficult,” Dr. Steve Landers, CEO of the National Alliance for Care at Home, said during a media briefing on Thursday. “To think that there’s billions of more dollars to come — it’s really unthinkable.”

Specifically, CMS believes it overpaid providers $3.5 billion from 2020-2022. Currently, the debt sits at $4.5 billion.

With no word from CMS, however, providers are left wondering when the government will recoup these funds and how.

“CMS has, once again, said they are not going to collect on that adjustment at this point in time,” William A. Dombi, president emeritus and counsel, at the National Alliance for Care at Home, said during a webinar presentation earlier this month. “They’ve not published any kind of schedule, or even criteria for determining a schedule. As this debt grows, we begin to wonder whether it will ever be capable of being collected without decimating the home health benefit under the Medicare program.”

Advocacy groups like the National Alliance for Care at Home, and The Partnership for Quality Home Healthcare (PQHH) are lobbying to address the cuts.

“We’ve been continuing to work on PDGM legislation with our champions in Congress, and we’re hopeful that we still could see some relief in a final congressional end of year package,” Joanne Cunningham, CEO of PQHH, told Home Health Care News.

Cunningham pointed out that PQHH, and similar groups, have gone back and forth with CMS through various comment letters over the years. The letters continually express the organization’s belief that CMS’ methodology determining that the home health industry has been overpaid is flawed.

“We spent a lot of time doing that analysis and kind of showing why we thought their methodology was wrong,” she said. “They finalized the methodology two years ago. There is litigation still countering this and Congress, certainly, has indicated that they don’t like the outcome of their methodology, which is these deep cuts.”

At a time when providers are already navigating the rising costs of delivering care, the looming clawbacks present another challenge. Providers are considering how future recoupments could impact their business.

“That could easily alleviate some home health aide positions or roles,” Cleamon Moorer, Jr., president and CEO of American Advantage Home Care, told HHCN. “It could take away an intake or a scheduler. From a salary standpoint, a workforce standpoint, it would be a tremendous disadvantage. People may say, ‘that’s just a small part of your budget.’ But it’s 100% of someone else’s salary. It could put us in a position where we don’t have bandwidth.”

Moorer noted that American Advantage Home Care has already begun to think strategically of how to manage, if or when clawbacks begin.

For example, one of the things American Advantage Home Care is exploring is a possible restructuring of the company.

“We are really looking at our structure and asking ourselves, in the realm of the for-profit space, should we be considered changing or restructuring to a not-for-profit, where we align ourselves with organizations that can pursue grants and alternative funding models,” Moorer said. “What position should we put ourselves in where we open ourselves up to a wider array of funding sources from the philanthropic community.”

Moorer explained that organizations such as Habitat for Humanity are focusing more on the idea of aging in place.

For smaller or mid-sized home health companies, restructuring could present an alternative path for long-term survival.

“Maybe we widen our lanes and open up channels for funding and support to continue to provide high-quality care for patients,” Moorer said. “The margins alone will not be enough in the long run, unless you have the type of scale and various PPO plans within your portfolio in order to manage some of the quote, unquote callbacks and penalties.”

Clawbacks are becoming a dark cloud over the industry, but a small chance exists that CMS chooses not to collect.

“If it gets so big that they can’t possibly collect it, will CMS just find a way to waive it in some capacity, or will Congress step in,” Dombi said during the webinar. “Alternatively, they start spreading it out, so for the next 20 years, you have flat payment rates.”

Similarly, Landers noted that CMS might be considering the overall impact of clawbacks.

“The only good news is, I think, there must be some realization somewhere that they’ve gone too far, and that they have harmed people, and that going even further would be destabilizing, even beyond what we’re already seeing,” he said during the briefing.